EU referendum: Where does your industry come on the Brexit hit list?

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Had enough of people talking about vague referendum uncertainty and a post-Brexit hit to the UK economy? Suspicious they don't really know what they're going on about?

With so many warnings about thousands of pounds lost here, higher costs over there and general panic just about everywhere, it's understandable.

In an attempt to get a bit more specific about exactly where the doom-and-gloom will fall, Remain campaigners have turned a little hysterical at times (sheep, birds and pandas want to stay in, apparently).

But, muddled up in all the talk of post-Brexit economic woe is that fact that different industries will fare, unsurprisingly, differently. In a bid to inject a little more clarity to the debate, BMI Research, part of the Fitch Group which also owns the influential ratings and analytics agencies, has looked at four key areas companies should be on the lookout for when assessing Brexit risk – and ranked the industries that will be worst hit.

Investment delays

BMI reckons every sector of the UK economy will be hit, at the very least, by hold-ups in foreign investment in the short-term. Obviously, the affect on capital-intensive industries will be most acute. However, if the pound settles at a weaker level against the dollar, once post-Brexit negotiations have been wrapped up, the UK could become an attractive place for foreign, particularly dollar-based, investors. 

Cost increases

For companies with large workforces, a reduction in immigration after the UK votes to leave could push up wages, putting pressure on companies to keep other costs under control or to hike prices. Sterling depreciation will also hit companies that have to buy from abroad or have dollar-denominated debt. Firms should also look at the regulatory landscape – compliance costs could increase or a post-Brexit bonfire of red tape could ease the process of doing business.

Exports

The fate of exports is largely dependent both on what the pound does after a vote to leave along with the terms of exit the UK is able to secure. BMI assess the likelihood of Brexit having a "net negative impact" on an industry's export performance taking into account both these possible developments.

Public funding

For some sectors, leaving the EU could mean a very direct hit in terms of lost income from EU grants and projects. Although the UK government might replace these funds, there is no guarantee they would – or that they would go to the same projects and industries or in the same amount. 

The gloom table

Sector Investment delay Cost increase Negative affect on exports Decreased public funding Score
Agribusiness Yes Yes Yes Yes Four
Automobile Yes Yes Yes No Three
Airlines Yes Yes Yes No Three
Banking Yes Yes Yes No Three
Retail Yes Yes No No Two
Power and utilities Yes Yes No No Two
Pharmaceuticals Yes No No Yes Two
Infrastructure Yes Yes No No Two
Insurance Yes Yes No No Two
Mining and metals Yes No No No One

BMI said agribusinesses would come off worse from Brexit – as they face a quadruple-whammy in terms of delays to investment, higher costs, reduced exports and a loss of EU funding.

While pharmacuticals was the only other industry – of the ten studied – that would face a drop in EU money, BMI do not believe that UK-based companies would suffer export fallout or higher costs, though investment into the research-and-development heavy industry could stall.

For Canada, BMI said the picture would be mixed. The capital would "maintain its status as a global financial centre, but its importance would very likely diminish," with certain sectors like foreign exchange trading being hit the hardest.

In terms of direct financial spillover, however, BMI said that most UK banks "are heavily domestically focussed, and are generally adequately capitalised to be able to withstand the short-term volatility in wholesale markets and a depreciation in sterling."